E186: Matt Raad: Flipping Websites and Building Passive Online Businesses

[00:00:00] Ronald Skelton: Welcome to the How2Exit Podcast. Today, I'm here with Matt Raad and he is a specialist in buying websites and flipping websites and the passive side buying, as passive as we can get inside of any business. The passive side of, buying, owning, and running uh, web based businesses. Thank you for being on the show today, Matt.

[00:00:19] Matt Raad: Thanks so much for having me on Ron. It's awesome to be here. 

[00:00:22] Ronald Skelton: We always like to start off with origin. You and I talked a little bit before the show, we were having a good time. So to kind of catch everybody up, you're one of the OGs in this flipping websites and stuff. You actually, cause I did it years ago back when we, you know, it was all on warrior forums and stuff like that.

And you happen to know what those are. That's an instant indication that you've been doing this for a while. Cause, now they've got fancier websites to sell these things. Give us your origin story. How did you get into this space? What did you do beforehand? Let's get the audience to kind of know who you are before we get started.

[00:00:51] Matt Raad: Yeah, I think, well, I think for me, ever since being a kid, I grew up in a very poor, environment and I grew up on farms and things like that. And my dad was a farm manager. And I think two things that influenced me. One was, I wanted to figure out how to get some money and two was, I always love this idea of making money from thin air.

So I was obsessed with like business and, in particular, as I got a bit older this idea of passive business, so making them as passive as possible. I didn't want to be working nine to five or these days it's five to nine. And so the journey I went on was to figure out how to get the best business and have this ideal business model where I can work with her, wherever we, wherever I want. 

And luckily for me, I met my wife, my beautiful wife, Liz. And she's been on that same journey and she grew up in the country as well, on farms as well. And why that's important is, one at Ron, one of the big things for us was, we wanted businesses that allowed us to work from home or remotely. Like in rural areas, in rural Australia. 

And so for us, we started buying and selling businesses. We realized that was the way to true wealth. And like I said, that passive business idea, I think one of the things that influenced us a lot was in the early days, we were lucky enough to read. We bought our first business 30 years ago. And I think in 1997, Robert Kiyosaki wrote his famous book, Rich Dad, Poor Dad.

And we'd already owned a couple of businesses by then. But we knew we're on the right path. And I think that book just reinforced and do you remember, Robert wrote in there, it's not just about being a rich dad, poor dad idea, but the businesses, remember he said, he buy laundromats or car washes because you can put a jockey in and run them. 

And that's kind of the journey we went on. We hung out with high net worths who are also buying and selling businesses. And we loved it so much. We ended up working for them as like M&A specialists. We did business deals up to about 20 mil here in Australia. But then kids came along.

And also the internet around the same time. So this was around the GFC, around 2008. Maybe a little bit beforehand. And we suddenly realized Liz, she's super smart. She's really good with business. Suddenly realized, Hey, we can just buy and sell businesses, but now we can do it online. What the hell are we doing with bricks and mortar?

We don't have to go to the banks to loan money anymore. We can buy these cash flow businesses. And it was amazing. It was very, we just literally build up a portfolio of websites, just like our high net worth mentors were doing, but you know, they're raising tens of millions of dollars to do it. We just did it in our pajamas at home at night.

Building up these websites and build up these portfolio of cashflow websites. And the beautiful thing for us was Ron, we suddenly had access to America, which is the world's biggest marketplace. And so most of our websites were based in America and here we are in Australia. So there was no geographical borders anymore.

Like with our bricks and mortar businesses. We used to export to America without bricks and mortar businesses, but to be able to do it from the internet from a laptop, was just mind blowing to us. So we literally started making money 24 7 while we slept, basically on autopilot. And to us, we'd reached Nirvana in terms of buying and selling businesses.

That, that was we were hooked from day one. 

[00:04:18] Ronald Skelton: So I always tease with all of my people from overseas. When we go to school here in grade school and kindergarten here, they start teaching us like immediately anytime there's a problem, the first question we're supposed to ask is, what can I buy to solve it?

And there's something about Americans, and I mean, and we still, I have to get to my wife and my family like this. Cause every time a little thing pops up, we're like, oh, cool, what do we need? Like no, it's not what you need, is what do we do? It's very often like when the problem pops up is what do you do to solve it?

But the our natural instinct is what do I need? Like i'll go buy a better calculator. It's a math problem I guess I need a better calculator. So yeah, we're a consumer driven country for sure. 

[00:04:53] Matt Raad: And it's the, and it's the best country, like the, the best country to do this. Like buying and selling websites because, or to have website space because the, because of that, because consumer driven. 

Actually quite a few people mention that like when we speak to all our American friends that they say it is really noticeable. And that's why affiliate marketing and, and semi passive websites. I need to say they're semi passive now, not quite as passive what they used to be, but they just work so well in America.

And you guys have also got, world's biggest economy and definitely world's biggest online economy. So it's very mature. And also you've got the population. So here in Australia, we've only got 30 million. You guys have got 10 X that you guys got around 300 million people. And all the different time zones, big country.

It's absolutely perfect. And we were buying and selling back then, Ron, these marketplaces for websites didn't exist. So it was wonderful for us. We got to meet so many, make so many American friends cause we would just privately email Americans who owned these websites that were interested in. And we say, Hey, we're here in Australia.

We're cash buyers. Do you want to sell your website? You notice you haven't done much work on it recently. And that's pretty much how we got started. We got chatting to so many different business people in America and we started buying websites off them and it was brilliant.

It was absolute. And back then that was on Skype. These days it's all on Zoom, but back in those days it was all on Skype.

[00:06:15] Ronald Skelton: So when you were getting into this in 97, I was just getting out of the military and going to work for Lockheed Martin and defense contractors and that type of stuff. All my buddies started making big money in the dot com space. 

And I was like, I'm going to have to check this out. So within a few years, I jumped out of the, defense contracting world and got into the dot com world. Just as it started to explode. Like the implode, I should say. So, uh, unfortunately I, the experience I had in the dot com world, besides a few good startups, was mostly helping them liquidate equipment and like deal with the bust.

[00:06:50] Matt Raad: Yeah, you know, this marketplace, well, you've seen being through the booms and busts. Well, now it's matured though. That's the good thing. It's a lot more mature. It's not the wild, wild West that it used to be.

And particularly in what, the area we're in, like you, I noticed you've had a few guests on your show who are from our community. Like Blake Hutchison from Flippa and Joe Burrill. He's one of our original students that we personally coached. And he's done over 5 million in website deals now. But it, that's because it's a lot more mature.

It's not that boom and bust like back, like you said, like in the late nineties, it was a pretty wild West place. But now there's a lot easier, a lot more accessible for people wanting to transition out of their corporate careers. 

[00:07:30] Ronald Skelton: So somebody is in a corporate career right now and they're thinking, I want to live the remote lifestyle like I do. 

I live in a tiny home. This I was telling you before, this is a tiny studio, right? We can pack up a label. There are redwood trees in my front yard, 350 foot tall redwoods, like where we can move anywhere. This is the third time in five years we've moved. 

[00:07:49] Matt Raad: That's how you want your life to be. That's how you want to be able to earn income doing that. That is the dream. That's what we help people do. 

[00:07:56] Ronald Skelton: So, what skill, I'm pre, previously a nerd, right? I told you a little bit beforehand. When I worked for Lockheed Martin, it was very common for me to sit behind a network sniffer and watch traffic go by.

But for the average guy coming out of business, what skillset should they have if they're going to own, operate, or who should they hire if they don't have the skillset? What is the criteria, the entry criteria to be in this space? 

[00:08:18] Matt Raad: That's a really good list uh,question. In my opinion, the number one skill you need, if you want to do this is just learn the basics of how a website works and learn how to build a basic WordPress site. And that's of course what we teach. 

But we, we do train, so anyone listening,we specialize been doing this, got a lot of experience of helping people transition from corporate to doing, being able to work online full time. And I think it always boils down to, actually Ron there's two key skills. Is one is, which your listeners will find really interesting.

One is the, on the surface, the boring, learn how to build a basic WordPress site. But don't worry if you listen, you don't have to be full on technical or anything like that at all, because then Ron's, as Ron very smartly mentioned, after that you just outsource everything. It's dead easy. So that, that, that's skill number one. But actually the next most important skill that kind of goes hand in hand with that is learning how to do website due diligence.

Which is very similar to when you buy and sell a bricks and mortar business. So I know like you cover on your podcast a lot talking about website. So business due diligence. Well, that's the key skill that we love teaching people because, in the early days, of course, we made all the mistakes. And you know, there's a lot of, there's not, I wouldn't say there's a lot of, well, there is a lot of, I take it for granted.

To me it's really easy, doing website due diligence. But they're probably the two main ones. And their moneymaking skills for the future, in my opinion, that it is brilliant. And now the good news is we can teach complete beginners how to do that, but it takes time. But once you've got those two skills under your belt, then like me as a kid, my dream was always, how do you make money out of thin air?

I reckon then you can make money out of thin air. If you know what you're doing, if you know how to do a good website due diligence, you can pick yourself up a bargain. And then if you know how to, what goes on in terms of the, how the site's built, you can easily get an outsourced team to help you run that site.

Well, it's your oyster then. Then you can go and live in, wherever you want and earn money from wherever you want. 

[00:10:21] Ronald Skelton: Yeah, I've dealt, I've built my fair share of WordPress sites. I've actually, installed it and I'm down to the core. I understand my SQL well enough. I can crawl through the databases from the command line and stuff. I'm a little different. 

[00:10:31] Matt Raad: Wow. Like I said, you are full on technical.

[00:10:33] Ronald Skelton: Yeah. I'm a little different, you know, than most. It's been a while since I've done one, but I, it's just like anything else. I can jump right back into it. The one thing I already knew about and it's getting better because now I get an automatic, WordPress itself gives me an automatic update every once in a while. Like you need to install this.

There's tools on there. But one of my biggest issues with WordPress is it's so big, that it's also a big target. So vulnerabilities pop up. I've had more than one of my WordPress websites hacked and, you know, replaced with junk and had to rebuild them or whatever. So, do they need to know what part of web security and that type of stuff they need to know to secure their income?

[00:11:10] Matt Raad: Yeah, that is definitely a bigger issue these days, but it's an issue for all business. If you want to be in business, you've got to learn how to cope with hackers anyway. And there's two really, for most sites, you got to remember the sites that we're building or buying, so we build websites from scratch as well.

What's called niche sites. They're not massive targets. Like every site on the planet's a target. To these, they're just bots, these hackers. And really they're pretty unsophisticated unless they deliberately decide to target you because you'd like a particularly big site. But the good news is first and foremost, we're building or buying what's called niche websites. Like, little tiny sites, like how to train your German shepherd, how to, what are the best rifle scopes?

What are the, what are the best you know, bug out bags or like you go into these niches or how to play golf better. And so that's a good thing that they're not really worth hacking as such. But these days, there are some really good plugins that you can put on, which are free for WordPress. So like WordFence Security, it's one that we recommend all our clients use, it's totally free.

It stops 95 percent of hacking attempts straight away because it's just a, it's a hard firewall around the site, website. And you don't, I'm not technical but my wife is pretty good technically, but we have techies that do all that stuff. I don't touch any of that, nor do any of our beginner clients. And then the other thing though, Ron, that's changed over the years is, website hosting now is heaps better. And they do a lot of the heavy work on or should do a good, there's good and bad website hosts out there. But a lot of the hosting services, which, by the way, are really cheap, like you're talking 10 a month or $7 a month and you can host unlimited websites. They tend to have a lot of firewalls now that they have to legally, and they will help you fix up websites if they get hit with malware.

Again, with good hosts. So it's a lot easier than what it was, you know, even 10 years ago, that side of the marketplace is getting better. And honestly, it's not occasionally we see, we have a big community of students all around the world. Like not just here in Australia, obviously in the U S. And it's not something we see a lot of where, you do see it every so often where a student site will get hacked, but it's a lot rarer now than it was, let's say five or six years ago.

So that's not a concern. The technical side, we talk about, buying and selling websites all the time. And the number one thing people freak out about is like technical stuff. Like what you're asking me, like security and how do you do all this technical stuff? That's not the main part around this, but that skill we can teach you.

That's pretty easy. You can learn that part time in the evening because it's just click and drag these days. WordPress basically works off click and drag like everything does. That's not the skill. The skill is exactly what you help people with on your podcast, which is understand this due diligence, ferreting out the deals, getting off your butt and doing something like actually finding the good deals that are out there.

Cause there's some amazing website deals and that's the fun part. And you don't, and it's understanding your risks too, because you're buying and selling businesses. So that's pretty much the main skillset that you need. If you're listening to this, you need to put aside the technical side. That technical stuff can either be learned or outsourced.

That's easy. It's the mindset around being an entrepreneur and getting into this and buying and selling and what are your goals? Do you just want one website? Do you want a portfolio? Do you want to replace your income? Are you looking at a side hustle? So it's about constructing your life, finding the time to study it and learn how all that works, and then building up your portfolio. Just like you would with bricks and mortar businesses.

Except you can probably go in and buy, it's a lot easier with websites because you can buy a much smaller websites that are very profitable and you can get some amazing results. Whereas we've always found bricks and mortar businesses, particularly as a young entrepreneurs, it's very difficult with the banks here in Australia.

We're always trying to fund the businesses because we had heavy inventory, like stock based businesses. Whereas with websites, you can buy a really good website for under 50 grand or even under $10, 000. Some of our best students have bought, amazing sites. One, here's the sort of site you want to buy, right, Ron?

So one of our students, they've bought a gardening website for $400. The guy neglected it. They noticed he hadn't touched it or updated it in years. Sent him an email, said, sure, I'll sell it for 400 bucks. It's spring here, right, it's just turning into summer here sorry, now in, in Australia. And they will, they're already making $4, 000 a month off that website.

So that's semi passive income. They have two writers on it. They don't touch it themself, they're not gardeners. They're laptop lifestyles. They live in Thailand at the moment, living on off a laptop. And so for 400 bucks, these young guys, that's they're traveling the world. They own about 10 websites. And their websites range from making like $500 a month up to four or five grand a month. And 10 of those, there's a six figure income. Easy.

[00:16:22] Ronald Skelton: So, what's the, timeline from the time you buy something. Cause I know that content takes a while. There's SEO. I'll tell you what I'm looking for and why, just because I don't, I'm looking cause I own Paixu media holdings and that's my company that holds this podcast and own a couple of newsletters.

And we're looking to acquire other content, mostly in the B2B space cause that's what I know. And I think we can, yeah, I think it's a little bit more, uh, you call it economy agnostic. B2B's and we're fairly decent in, of down economy is still going to work. So we're kind of looking in that space. That said, I'm more interested in WordPress driven websites with great content that good,I don't care if they're monetized at the potential in the beginning.

As long as they have good content, good traffic, and they're starting to already collect their emails, right? I want them to own a list of some sort because I'm more interested in, alleviating some of the pain of the Google algorithm changes, by building a really strong newsletter behind the, you know, behind the content. And owning like, the customer list basically.

[00:17:30] Matt Raad: Yep. And that, that's really, really smart. We teach exactly that. Like get you, whilst we love Google, you definitely, all things being equal. If you can have an alternative list with website off to the side, like a list or a really strong social media following, which in essence, like a private Facebook page, when you think about it, that's pretty much a list. Or a really good YouTube channel or the new thing, which is we're seeing, which is working really well is newsletters because they're in, that's a highly engaged audience.

So they go hand in hand. And so what you're trying to do is literally what,that's a key money making strategy that we love to teach, which is build up this portfolio. You kind of like become your own little media channel and you can identify a niche and you touched on something there, Ron, which is really smart.

You don't even have to worry when, especially once you know what you're doing, but even as a beginner, you don't really even have to worry about monetization because that comes, I have a saying in our community, people know. You get me a website with a million eyeballs, I'm going to make a million bucks off it.

That, that's basically, if I get a million visitors a month, that's a seriously kick, well, let's just say kick butt website. 

[00:18:39] Ronald Skelton: That's a pretty hefty website, yeah. 

[00:18:41] Matt Raad: Yeah, yeah. So it's about the traffic. So you mentioned, as long as it's got traffic. And these days I can tell you traffic is literally money in the bank.

If you're listening to this, it's like an asset. These websites are change. They're not just pretty online brochures or places where you look at, you know, cat videos. Like what Ron's saying, any business side or any website, like we buy hobby sites like gardening and golfing and,pet training. Any site that has lots of traffic though.

I don't care what the niche is. It doesn't matter. It's irrelevant. If that traffic is engaged is like money in the bank. It is literally going forward. That will become, it's like the new virtual real estate and it is incredibly, and then like Ron saying, it's a really smart idea. If you can layer onto that a bit of a list of some kind, you are building up for the long term.

This is not a get rich quick thing, that I'll come back to your question. But for the long term, that is literally like building up a portfolio of bricks and mortar businesses, or I guess, you know, like real estate. We view it as pretty much online real estate. 

[00:19:46] Ronald Skelton: Okay. the main reason I'm concerned about not having the list would be, the algorithm changes constantly with Google, right?

[00:19:52] Matt Raad: Yeah, it does. Yeah. 

[00:19:53] Ronald Skelton: I know people who were doing really, really well, like really well. High six figures, low seven figures per year that are now like sent scrambling because the, one of the algorithm change, thing cut their income by down like by 70, 80%, right?

[00:20:08] Matt Raad: And that, that, that is a business risk. And, but the good thing is you can learn from that. We've seen that across our community a lot over the years, but one big way that you can potentially mitigate that is something that I keep mentioning and that we're passionate about because that was our strategy.

We only teach what we do, right? So we don't touch e commerce sites for a start. Anyone listening, just for the record, we're not interested in e commerce because of our background in manufacturing and wholesale businesses. We don't ever want to touch an online business that involves physical inventory because you tie up all your capital and it holds you back.

We want to be debt free and nimble, but the way we mitigate risk for us and what we recommend is a portfolio of sites. Ideally, five to 10 websites. So if one takes a hit, the others, uh, it's still generating you an income. And that's what we've, we've actually by the way, that's how we did it with bricks and mortar business as well.

We bought, but it's a lot harder with that. I don't recommend that if you're listening to this and you're a beginner, that would not, it's a very challenging thing to do with bricks and mortar businesses these days. But with websites, you can build up this really nice portfolio of what starts out with little tiny sites and you build them up over time. And they're kind of semi passive.

You're not working on them full time so you can do it while you're transitioning from a job or whatever. Just do it in the evenings. And that's what a lot of our students do, but mitigating that risk is important. And that's why we love the portfolio idea. Owning multiple websites. 

[00:21:36] Ronald Skelton: So, um, let's talk a little bit about. Like some of the other interesting things we can do inside of the space and maybe even some of the risk. So, uh, I'll give you, I'll give you a good case study. I was looking at, fairly recently, a few months ago, I looked at buying a website with a decent list, 25, 000 subscribers on the list. Website was doing about 90 to 110, 000 page views for a month, that it was a very specific high end, clientele.

Meaning, uh, private equity, family offices, really high end type of content. One of the things I noticed in my, pre due diligence, cause, interesting was is, I found it through, through this podcast and through other stuff. The guy I was chatting with, and I don't think he thought I was serious about buying it, until he gave me a number in low six figures.

And I said, okay, let's do this deal. And he's like, you're serious? Now I got to figure out if I have to,if it's a, a benefit to my business or a distraction from it, right? Now that I know you're serious, I got to think about this. And I said, okay, while you do that, I'll do a little pre due diligence.

I'm going to crawl through your website a little bit, see what you got. And,I did some, but I didn't like technically, I didn't get into it. One of the first things I noticed was it was, uh, on a proprietary content management system. And as I looked at, you know, like a custom built tool. And I reached out to him and said, yeah, I don't touch those.

He goes, well, the company that we're using is going to move it to WordPress. I said, okay, they have to be really, really good at what they're doing to do that, or you're going to lose all your traffic. And it's like, no, no, they've done it a bunch of times. We're not going to lose any traffic. And I was like, I doubt that.

I was like, you have, there's a, it's so complex. Every URL that, they had 3, 700 links. And I said, every link that's going to your website and some of them really, good links, um, every link that goes to your website has to be remapped to the new content. So there's some technical nerdy ways to do it through dot HT access files.

And it was just kind of crazy redirection. Don't you got to sit there and hand map everything. Or you got to build out WordPress and do a custom structure inside of there to where every URL that used to work still works. And I said, I don't think you're people doing this. I don't think they're going to get it right.

And he said, well, no, no, they got it. I said, I'll tell you what, I'll revisit this after the move. 

[00:23:51] Matt Raad: That's the way to do it. Let them do it. So yeah, it's full on technical stuff like that. And particularly for our audience who are not technical like myself, we just say, that's a massive red flag. Walk away, find another deal.

So someone like you,you, Ron, you sound like you could actually handle it pretty okay. And at least you understand what's going on. And the good news is there's so many deals out there. If you're listening, as if you're a beginner, you don't have to worry about that technical stuff. You just move on to the next deal.

You're looking for really simple sites. You do not want those hand coded sites. It is the, they're always a bargain price too, Ron. That's the problem because no one wants to fix them up. Unless you have a technical team. 

[00:24:30] Ronald Skelton: This one was only generating, high five figures, almost six figures in revenue. And he was selling for very low two figure or six figures in ink, for price. So about three X is what he's kind of wanting, 

[00:24:43] Matt Raad: Yeah. 3x is normal at the moment. 

[00:24:45] Ronald Skelton: And, most of his income was from that 25, 000 mailing list. He had a few people that would host events, two or three times a year, and they would pay him big money to mail out to his mailing list that they were hosting an event.

I can look at their traffic and it goes straight from like 80, 90, 100, 000. Now it's down below 30, 000. It's been that way ever since the migration. 

[00:25:07] Matt Raad: So that's good. See doing pre due diligence and knowing what you're looking for, saves you from a mistake. And that's what, that's what we're about.

You can always find good websites out there to buy. They're pretty easy. There's heaps of broker flat, platforms like Flippa, Empire Flipper, FE International, all those guys, Quiet Light. But you still need to do the due diligence. Even though the dealers are a lot more vetted these days and doing like what you've just said, it's pretty easy when you know how though.

And I want to reiterate for someone non technical, this stuff's pretty easy to learn what, if you spend the time at it. And that, you know, I can give a plug, but that's what we teach people.Non technical, because that's our background. We weren't technical and it actually it held us back a lot in the early days.

It was a real struggle for us technically to get into this and to understand what are these redirects on things and how do you do the, how do you move a picture to over to the right hand side or resize it. All those little things. But that's fun. Once you figure it out, these days, it's a lot of fun.

It's a lot of problem solving. So mentally it's good for you. It's fun doing that sort of stuff. And then you feel, and we find a lot of our clients because they tend to be, 40, 50 plus or 60 plus with kids and stuff. I love it because then I can go to their kids and say, Hey, I just built a website or I renovated a website.

And the kids are like, what? Cause the kids grow up being, the kids are fine with this stuff. Kids take to it really easily, the technical side. So that's a pretty cool outcome when you're, when you learn how to do all the technical side. 

[00:26:37] Ronald Skelton: So let's talk about what are the qualify, what are you looking for now? You said, you mentioned something earlier, I told you I'm mostly interested in B2B. I also like passion, passion niches. So passion niches. So if somebody's truly passionate, so pets, in the sporting goods world, maybe golf, bass fishing, right.

[00:26:55] Matt Raad: Any sport. Like you can go, yeah, fishing and then you can go, so we've owned fishing sites and then you go, you niche down into like bass fishing. So any hobby we call it passionate, any hobby or sport that people are into. And particularly ones is a big hint, anywhere there are beginners learning how to do stuff because actually how we make money online, when you think about it and think about when the internet first started, well, first started to become popular when the browsers started working properly.

When people go online, if they're not looking for funny cat videos, what are they looking for? They're looking for solutions, right? So what we say to people is, think about this when you're doing due diligence or what niches you want to get into. All you're doing is answering questions. We're actually there to help people.

Now you don't have to be an expert in like, Nathan and Alexi. You know, they're not experts in, in gardening. That they live in a lap, off a laptop that they're traveling around the world, because you hire experts off places like Upwork. But the niches that you go into and essentially what we're doing with these when we're talking semi passive websites, is we're answering questions. So if someone wants to know how to be richer or healthier or happier and happiness, we put, we love those passion sites. So if they, we've got a client now, he makes six figures off a, a guitar website. It teaches people how to play jazz guitar.

Actually, so Greg, he does, does that. And actually we've got a really good example in the pet niche, which I have to share with you. So one of our clients, American client, Dave and Connor, they're on our podcast. He's made his money in America in commercial real estate. And then he joined our course and bought this website in America, off a broker.

It was making $300, 000 a year, net. His net profit. He bought it for a million dollars. And he did like seller finance plus got, um, raised some money off some friends and stuff. Anyway, really good outcome because it's in pets. Now he's not an expert in pets at all, but it came across with all the writers on there.

There's about, I think there's like half a dozen writers. It's a big website. Lots and lots of traffic. And all they do is they make money off ads. So, so it's all automated. And also off affiliate offers. So people, want to buy pet related products and they just get an affiliate commission. They don't have to stock the physical inventory. 

Anyway within owning it, so he's fixing it up and I'm doing coaching calls with him, and all he did, you want to know what he did to double the profit? Just changed the ad network. That was,

[00:29:24] Ronald Skelton: It went from, Amazon, or I mean Amazon. Google, Google Ad. Google Ads. 

[00:29:29] Matt Raad: Yeah. Google ads to, they put what's called Media Vine on it.

Media Vine. Media Vine. And within two weeks, the profit had doubled. Now that thing makes $600,000 a month, a year. Sorry, 600, 000 years. So it's doubled. And that means the valuation on it is probably up around two and a half mil, because it's in a really, it's one of the most popular niches at the moment, pets. And so, that's a good ROI without having to do to, now they've done, they're doing lots of other stuff on the site, but essentially that was the number one change and that's the sort of thing we teach people. And you got, once you understand this, you can see these opportunities out there. 

Cause that's one of the reasons actually go Dave, smart guy. He actually picked up the original owner, set this site up as a passion site, was really passionate about pets and he just run it for 14 years. And he never really worried about monetizing it because let's not kid ourselves if you're listening to this, 300 grand a year for a website that you love and are passionate about, that's serious coin. 

That's a lot of money. So he didn't worry about trying to optimize the monetization. Whereas Dave in his pre due diligence could see, Oh, he's just running standard Google ad blocks on tHere. I can just stick it onto, by the way, Mediavine, if you don't know what it is, they manage the ads for you. So it's even more passive.

It's not more work, it's actually less. And they take a cut, but at the end of the day, they optimize the ads for you literally while you sleep. And yeah, doubled it from 300, 000 to 600,000 a year. 

[00:31:00] Ronald Skelton: There's, uh, google adsense, which is what I hear the lowest paying one. And then there's Mediavine and Ezoic. Who's the highest paying currently? It already depend on the niche 

[00:31:11] Matt Raad: Mediavine, definitely. Ezoic, is, is very variable, the results, what we see. So, so one of the key strategies we teach people is exactly what I've just said. If you're listening to this, is when you buy a website, you want to test or I'll call it play with the monetization and you want to test different monetization networks. 

And we recommend either Ezoic, Raptive or Mediavine, but you need traffic to get into Mediavine. You need to have 50, 000 visitors a month. So that's when you're buying bigger websites. But I think unanimously across our community, we've all, so we've got a big database of very successful clients and we see Mediavine consistently being the best one.

And for our own portfolio, we found Mediavine the best. And Ezoic, the results are quite variable. So what you do is, if you're listening here, it typically passion site owners is why it's worth buying passion sites, like in the case of that pet site, they don't really, they just stick the basic Google ads on there and they're not optimized and, but they don't care 'cause they're making good money off 'em and they're kind of semi passive.

So what we do is we put, what's called ad managers or ad networks onto the site. You just, it's free. You just, you sign up with them and they have a chat to you. They look over your website and they make suggestions and then they manage the ads for you. It's kind of like an ad broker in a way, but it's all automated. And they can really, they can literally double the income of websites.

We've done it heaps. You just literally double the income within a couple of weeks. 

[00:32:45] Ronald Skelton: So I would be interested in addition to BNB, I'd be interested in, like one or two of those passion niches and that's pets. Cause I just think no matter what economy, what, when COVID hit, what did we do in America? We went out, all of us went out and bought more pets.

More pets were bought during COVID than any other time in history. So, we just went and got more pets. 

[00:33:02] Matt Raad: I'll tell you another good niche, Ron, that you'll love is, um, survivalist niche. It's huge in America. As you can appreciate. And that's the, that was even from when we started a decade ago and homesteading and stuff.

But this survivalist niche now is, and of course, during COVID that went, it really, but it was already accelerating. It's already a huge niche. These niches of what we call evergreen. They've been around, people say, Oh, pets is huge now. It's always been huge. Crafting niche. People say since COVID it's gone nuts.

No, it hasn't. It's always been big. Food blogs. Massive now. Travel blogs. People love travel blogs because you get paid and it's tax free. Like you get paid to travel around whatever country it is that you want to travel around. Travel blogs are massively valuable now. And they're legitimate because people blog about places that they travel to and they make full time incomes off this.

We've got clients that are, one of our recent interview. I did one of our clients, Annette. She bought a 14 year old, you would call it RVing in America, here in Australia we call it caravanning. And,it was an Australian site. So this is in Australia where this, where it's quite small compared to America, right?

She bought that site for $5, 000 off a private Facebook group, off a friend. No one else saw the value in it. And that site now makes $5, 000 a month. Oh, by the way, she's retired with a husband and traveling around Australia in a caravan, and that's her main source of income. She just, um, makes, makes money off that little side.

And those sorts of niches are hugely valuable now. That site would be worth what's five times 30, whatever that is. It's in the six figures. Be worth over around 150 K if she wanted to sell that now, and she bought it for five grand. This was about, I think it was two or three years ago. And she just built that up. 

[00:34:49] Ronald Skelton: So buy and hold ,or flip? 

[00:34:52] Matt Raad: Buy and hold, I reckon. I mean, this lends itself to website flipping. And I know that's probably if you're new to this and you're going to Google this space, you're going to see lots of stuff about website flipping. Which is, even flipping those still takes about 12 months or so to get these sites going.

So please don't think when I say you can double the profits in two weeks, that's just one part of it. To flip, you still need a good 12 months, I reckon. It's not, I mean, some people do a lot quicker flips, but for us personally, because these are such valuable online real estate, I think it'd be crazy to sell off good, good sites too early.

Once you've got a good cash cow, although what happens is Ron, when you own a portfolio of sites, right? Once you start getting over 10 websites, no matter who you are, it's a fair bit of work. Like headspace kind of running them. It sounds strange, even though they're kind of semi passive that there's a headspace. And what you do is you cycle out your smaller ones.

So, but in general, what we're trying to do is get to this point of long term assets like Warren Buffett teach is, so we're compounding our wealth. And we run with our bigger wins and that's typically, so for Liz and I personally, we're trying to, we hold them for like for multi years. Their cash cow assets, they're like online real estate.

We don't want to sell them off. Because the ROI just goes up and up and up. Even if they just sit steady, the long term benefits. So we've been doing this now for 15 years and we have websites that we've held for more than a decade and far out. Are they, if they generated a lot of money over that time, when you add it all up, it's mind blowing.

Even in small amounts, even if it's just making a thousand bucks a month, it's better money in the bank. You earn what? Four percent a year in the bank. These things are earning, 30 percent ROI every single year for a decade. That's a lot of money. 

[00:36:54] Ronald Skelton: So inside of the brick and mortar world and even on SaaS and stuff, there's a, an arbitrage game that can be played.

So you can buy the arbitrage. And what I'm referring to the arbitrage is basically the more company makes, the more the multiple goes up. So in the brick and mortar, yeah,

[00:37:13] Matt Raad: That's now two and a half million dollars, that thing. And it cost him a million bucks. It goes up exponentially. 

[00:37:18] Ronald Skelton: So where I was going at, so for instance, I buy a automotive shop down the road here and it's doing 1 million.

I'm going to get, I'm going to pay, 1 million or below in EBITDA. That'd be a hell of a automotive shop, but just for example. I'm going to pay two and a half, three X, maybe 3. 5 X for that. In the current market, um, if I can get five or six of those together and I get above the, there's a threshold here, I can get above $4 million in EBITDA, I can sell it to a PE firm for five, six, seven X, right?

Is there, is there a game that can be played inside of this web, where if you get a, if you get above a certain place, can you sell it to the bigger boys for a higher multiple than the 10th? 

[00:38:04] Matt Raad: Absolutely, Ron. You are one smart man, because that is the new trend that's happening out there. We're seeing that, and I love that space, because that was our space back in M& A.

Exactly like that, what you said with bricks and mortar, with EBIT s of one mill, that was our specialty of helping these and selling these, those businesses. We used to specialize in selling bricks and mortar businesses with EBIT s of one to two mill here in Australia. And that's exactly what they were doing.

They bolt 'em together. And now, and when you see that happening, when the big money, like private equity is coming into that and high net worth families or family officers doing that,you're on, like, that's a, that's a really good marketplace to be in. And guess what's happening right now.

When we know all the big website brokers, they're doing exactly what you just said. All the big buyers, because they now recognize these things are such valuable assets, particularly long term. And you need, they want to portfolio of them. They buy up, uh, they want EBITs of one to two mil. That's the sweet spot or, or bigger. 

Nice problem they have in life, isn't it? They can't go smaller than that. And then they bolt them all together. And then that makes the valuation go really high. And they either go to an IPO. Or they typically are held privately now. And all the brokers are telling us what the arbitrage is.

If you're a small player, you can buy small sites under 50, 000, and build them up into much bigger sites and then they get on the radar of these big buyers. And that's basically, I think it's a really popular strategy within our community. Like that's what Dave and Connor were doing with their pet site. So they're, it's now got an EBIT of 600, 000, right?

Now it's on the radar of the bigger buyers who want to conglomerate in that pet niche. The other cool thing, Ron, is that this strategy that you're talking about, these big private equity firms now recognize niche is the way to go. They don't just need big finance sites or whatever like they used to in the past.

They will literally buy up pet websites or survivalist sites if they've got this combined EBIT of a mil. And, they're going into niches like, crafting niche is huge. The pet niche is huge, certain, like gardening is starting to become big. Food blogs now are huge with the big buyers. And so if you're listening to this exactly what Ron said and you love and you've got like the big goal of doing M& A and getting into that, like seven and eight figure range, you do exactly what Ron said. Is you bolt together these websites and you sell them out the PEs. And they can be cash deals too, which is really interesting. 

[00:40:34] Ronald Skelton: Interesting. So, I was just curious if that, I didn't even know that for sure that, that are my, what I buy these in as a holdco, right? I plan on holding them. So I didn't, I was trying to, I never did the research and go, do I have an arbitrage game to play later?

[00:40:47] Matt Raad: I know you, it's a really smart strategy if you can, if you think about it. And the good thing is, Ron, you don't have to be thinking, this is what we love. So we come from that background, right? But I'm not interested in spending millions on websites. Don't have to. 50, 000, honestly, with the way the economy is right now, and some people are saying it's a bit shaky or we could be interested, heading into interesting times.

I think the safest and smartest spot to do this strategy that you're talking about, believe it, because you can with websites, we've done it multiple times. Buy websites under 50k or under a hundred grand. And yeah, you think bricks and mortar business, a decent bricks and mortar business, like you said, with a, you're looking in the seven figures.

With websites, you can pick up bargain sites under 50, 000 and double them or triple them. And if you've got a group of them bolted together, that's starting to get exponential. The exit price, if you want to sell it to a much bigger player down the track. So that's a really smart way to do it. It's real-, I'm not giving financial advice here, I'm just sharing what we do. 

But, you know, it's a relatively low risk way compared to bricks and mortar world. You think about it, websites under 50 grand, you can pick up some bargains for that. And they call it asymmetric risk, which is there's hardly any downside. Cause it's only, you might only be risking 10 grand or whatever, but the upside is asymmetric.

Like it's just through the roof. It's, you can take it into six and seven figures. 

[00:42:11] Ronald Skelton: So next question would be, brokerage websites. Like Quiet Light, Flippa on those or cold outreach? 

[00:42:18] Matt Raad: Oh, I'm still a fan of, I'm a fan of both. The beauty of the, the brokers is that you do get really, really good deal flow and they're good operators.

And these days the prices have come back like to reality. The websites are, if you're listening to this, like Ron mentioned with bricks and mortar websites are sold exactly the same. Basically on a, on a three X multiple, which is three times the net profit. Net or, three times the EBIT, or basically if you don't know what EBIT is, earnings before interest and tax, it's just the profit.

So if the site makes, like our client site, makes 300 grand a year, it's worth three times that. And then it gets bigger, the bigger the site gets. And so the beauty of brokers is they pre vet the deals now. So there's a, I'm not again, not giving financial advice, but there is a relatively much higher degree of safety and also they tend to know the sellers like they do a lot of pre due diligence because they don't want to be selling scams and stuff like that.

And so you do get really, really good listings and you get access to extremely good listings through brokers. But also, I would, when you get good at this or if you love it, I still can't help myself. I like doing private outreach. That's how we made all our money years ago. We always, we did, by the way, we did the same with bricks and mortar businesses.

That's how we always got the best deals, was we would send letters, physical, remember those things? Letters? We'd send those private,(inaudible)

[00:43:44] Ronald Skelton: Yeah. I'm a direct mail nerd. 

[00:44:47] Matt Raad: Yeah, we put private and confidential and we'd send them out to factories in those, in, those grimy industrial areas. That was our specialty. We'd drive around industrial areas, look at businesses and privately contact them.

And to this day we do that, but we don't have to drive around in a car and industrial areas and we'll do it in our pajamas at home, looking at websites online. We just go to their contact page. We'll send them an email and say, Hey, noticed you haven't, you're looking for the sites that have been neglected. And to say, Hey, just wondering what you do on your site.

We're in the same niche with, you know, we're a cash buyer. You've ever, have you ever thought of selling? Simple as that. And so, answer the question, I think both strategies are really good for the majority of people, though. The brokers are the best place to start out with, if you're learning this though. 'Cause you've just got so many access to stuff.

[00:44:32] Ronald Skelton: So if you're not, if you're just starting out and you find a website you want, do you guys do the due diligence for people or? 

[00:44:39] Matt Raad: No, no, no. We don't get involved in that. We teach people how to do it. And also, we wanna empower people. We want pe, we don't get involved in that at all because, legally if we miss something, and it might be something good by the way, it'll take me two to three hours to do full due diligence on a website. 

And there's services out there that can do that I believe. But you get better off learning how to do it yourself. You should, or you're in control of your own money. Yeah. The biggest mistake we made in buying and selling businesses, particularly on our first one, was relying on the, the advice on due diligence off an accountant, and he got it completely wrong.

So we're all about empowering people to teach them how to do due diligence themselves. I think that's such a worthwhile skill. You'd be silly not to learn how to do it yourself. 

[00:45:28] Ronald Skelton: Okay. So I, I have somebody that I use for that, even though I can't do it myself. I like to have a third party look at it.

[00:45:34] Matt Raad: Yeah, that's okay. But you still need to know how to get what you, never rely on the one thing I've learned in business, cause I hang around. A lot of people that buy and sell businesses, both online and offline, and I can tell you every single one of them knows how to do good due diligence. Okay, you have advisors and you get a second opinion, that's fine, but at the end of the day, it's your money.

If you're spending that money, you want to know what you're getting into. It's not the sort of thing I would recommend you delegate. And also because in your due diligence process, what you're looking for is the opportunities to renovate that website. So think of like Dave and Connor who bought that pet site.

I don't think a due diligence service would have picked up, oh no, they probably would have picked it up maybe, but there was some other renovation opportunities that he picked up just by having a really good look through the website. Because that's a big part of due diligence is understanding what are you going to do to renovate the website. And you want to have a clear idea in your head that, that you're up for it. Particularly if you're buying bigger websites, that there might be more work to do. Or if you've bought a bargain site that's been neglected, there's going to be a bit of work to tidy it up. And so it's good to understand what you're getting into. 

[00:46:40] Ronald Skelton: Yeah, I get that. The one I was saying, I'm not going to say who it is because, just because I'm not going to do that, but the one I was thinking of, it's one fee. Like I want to say it's less than. Two grand to have them do that due diligence. And then for another 500 bucks, they'll give you a detailed report on all the low hanging fruit, switch.

[00:46:56] Matt Raad: Oh, that's pretty cool. Yeah. So that, that, that can be good. But what I worry about is when, so you're quite advanced, you already know, yeah, you know a lot. And so at that, those reports will make infinite, like will make a lot of sense to you and you'll get it. What I worry about is if someone's listening to this and they're a total beginner.

And they rely on that report. They're kind of being, they're going behind you. I get it. Yeah. You need that foundational knowledge. Maybe that's the way to, yeah, that's my concern. 'cause I think back to Liz and I, the mistake we made all those years ago, we were just total beginners in business and we relied on this due diligence that this accountant did on the business.

And when we got into it, it was almost going bankrupt. And that, that really, that was a very challenging time. Like we nearly went bankrupt multiple times because of that. And it took us years to. to catch up on that. That was a bricks and mortar business. But I think if we'd been, if we had some more basic knowledge, then we would have understood more what the accountant had shown us.

And it just, when you're totally new, relying on a third party for due diligence is not the best way. It's more, that's more useful when you're quite experienced. 

[00:48:04] Ronald Skelton: I'll go as far as saying a lot of people ask me how much information or how much knowledge do I need before I get do X, Y, and Z. And I always refer back, you really want a good BS meter. 

But you really want to do enough of your own knowledge where you can, like, I know enough. I've been around this space enough that it's a basically a time versus money thing. I'd rather pay 2500 bucks for somebody to go through and rip through it.

That's their expertise. All they do and that group of people is they do due diligence on content websites. And they gimme a little hanging fruit thing. It's not because I'm lazy, it's because now they'll get it done in, you know, two to three hours or next day turnaround type of thing.

And it saved me two or three hours. That's worth more to me now than that 2,500 bucks to do it. And, (that's a good point. Yeah.) I can skim through it and go, what about, 'cause I have that BS meter, right? I can, 

[00:48:49] Matt Raad: That's right. And Ron, you've got the experience too. You read that report and go, yep, yep, yep.

You'll just understand it instantly. And that's the advantage of people like yourself and myself. We're quite experienced. And so that, that's when those services work really, really well. They're kind of like an adjunct to your own due diligence. And like you said, if you don't have the time to get in and do it, I want to urge anyone listening, understand the basics of good website due diligence. Gosh, it's a, it's a handy moneymaking skill. Let's just put it that way for the future. 

[00:49:23] Ronald Skelton: So I do it probably a little bit backwards than most people would advise. I get in, I look at it myself and I like, when I figure out I can't find anything else, I will go ahead and right before I, right before we could have checked to buy something, I'll reach out to a company like that and go, Hey, take a look at this and see what I missed.

And I don't tell them what I found. I do not tell them what I found. Cause that, that to me, that breeds laziness, right? 

[00:49:45] Matt Raad: One thing that we get people to do is always start out small. So we don't like to see people rush. We made this, all these mistakes. We don't want people rushing out there and spending six figures on a website. If we say, in fact, your first website should be under $2, 000. Because if you can't afford to lose $2, 000, you should not be doing this basically.

And we're buying and selling businesses, right? So you can practice all these skills, not just website due diligence, but you know, SEO, content, renovating the website, fixing up. In a safe environment where you've bought this website under even under $1, 000 just by a little starter site. It's not, you're not buying it to make money off.

You're buying it to learn the skills, which is going to then let you buy much bigger websites. So you understand what you're doing. Because honestly, those small sites are exactly the same as doing due diligence on a bigger size, just as more zeros. That's it. It's the same stuff. It doesn't change across the board.

Whether it's a million dollar website or a $50, 000 website or a $5, 000 website, the due diligence is pretty much the same. We're just looking at, traffic, profit and the marketplace and what are the renovation opportunities. That's basically the skill you want to learn. So you can just teach yourself. Start by buying a little tiny site under a thousand bucks. Easy. 

[00:51:00] Ronald Skelton: So, yeah, we're definitely talk apples and oranges because what I was referring to is, a 250 to $300, 000 per year.

[00:51:06] Matt Raad: Yeah a bit of a different, you need a second opinion. So in our community, if you're in our community, we're happy to give an opinion though. We're like, we're, we're always happy to look over someone's due diligence.

That's not a problem. But we can't sit there for two or three hours and legally we're not allowed to. But we often help people all the time going through their own due diligence on a website. And I'll say, Hey, what do you think of this site? What would you pay for it? We do that all the time. So yeah, that is the difference.

You're spending six, whenever we've got clients spending six figures and above, we say, jump on a call with us. We're happy to have a chat. 

[00:51:42] Ronald Skelton: I would love to see a source for sites I can spend less than $2, 000 to buy, double their income, and they're on, cause I, I used to be a domainer. You know what, what that phrase is, right? I still, I still own probably 125 domains. 

[00:52:00] Matt Raad: Yeah, we, we do a little bit of that. That's kind of a fun hobby thing for me. So buying and selling a website domains. It's kind of like trading fine red wines. You know, the trick to that, Ron, you've got to sit on them for years and then someone approaches you and offers you lots of money for the, for, 

[00:52:15] Ronald Skelton: My biggest sales been, five grand or seven grand, I think. 75 hundred. Like, I had 3000 plus for a while there. I was paying, (Yeah. A lot of) EIP account at GoDaddy. GoDaddy, I actually, my own had my own concierge there. Right. Oh, You pay 30 grand a year in renewal fees. They, uh, they kind of tend to take care of you. 

So I own, I own quite a few that are short brandable.

[00:52:36] Matt Raad: Yeah. And you just, you just sit on them.

You get, we, we, every so often we get an email for clients. I, Hey Matt, someone just offered me 20 grand for this website. Should I take it? And I go, yes, you should. Cause it might've cost them, you know, 50 bucks. We've had, uh, one of our clients, it was a classic, it was, um, I think it was plastic surgeon, Texas or something like that.

And, there's something about plastic surgery in Texas. And they reached out to our client and said, we'll give you five grand for it. And the client asked me, what do you think? And I said, Oh, that's worth way more than that. Just say, no, you're going to sit on it or, or send them an email back and say, look, I know it's worth more.

If you want to buy it, you have to up the offer. Anyway, they got it for 25, 000 US in the end. So that was pretty cool. And it only cost them like 50 bucks and they'd sat on it, but they admittedly they'd sat on that for, you know, they had it in their portfolio for about five years, but that's pretty cool. 25 grand just off two emails, it's not bad. 

[00:53:29] Ronald Skelton: That would be nice. Uh, so how do people reach out to you? How do they find you? What's your course called? 

[00:53:35] Matt Raad: So we run a course called the Digital Investors Program, where we teach beginners how to buy and sell websites. But really the best thing you can do is watch our free masterclass because we go through this whole strategy and we show the exact kind of sites, these passion sites and what we pay for them and how we value them.

So we've got a free masterclass on our website. If you just, if you're listening to this, just go to ebusinessinstitute. com. au, forward slash masterclass. Or just go to our website, or you can Google my name, Matt Raad and you'll find one of our two websites. And there's always a link on there to the masterclass. That's probably the easiest way. 

[00:54:10] Ronald Skelton: Awesome. 

[00:54:11] Matt Raad: And that's free. It's about 90 minutes, goes through everything. 

[00:54:14] Ronald Skelton: If, let's wrap it up with this one. If somebody can only remember one or two things from this show, today, what would you want the key takeaway to be? 

[00:54:21] Matt Raad: Learn, if you like this sort of thing, take the time to learn how to do proper website due diligence.

It's probably the key thing that'll keep you safe, and it's the key thing that'll make you the most money over the next decade. That's my opinion.

[00:54:31] Ronald Skelton: I agree. Yeah. But I was in this, I was, we didn't, we talked about this before the show, but I was in this space once before and got burned and got out of it, and now I just start,30 years or 20 years later, I'm returning to the space. 

[00:54:42] Matt Raad: And I think with the way the world is now, not, not just economically, but also the way businesses moving online. And also you gotta think there's so much, so many people want to be able to work from home or work remotely like yourself, Ron.

And there's a lot of burnout out there in society. So website assets are becoming more and more valuable and they're viewed as online, assets. So it's like money in the bank long term. So that's the other thing that I'd want you to take away from this. If you've never thought about buying and selling websites before, cause you, you think they're just like pretty online brochures, they're not. They're actual online real estate.

You get a good one. They are highly, highly valuable for the future. And therefore it feeds back to learning how to do good website due diligence. Should uncover those gems, those diamonds in the rough. 

[00:55:29] Ronald Skelton: Awesome. Well, I appreciate you. And I think we'll call that a show.